Whenever a startup is put together, or a new business plan forms, the person at the helm is going to one day want to attract investors to their company. They’re going to want to sell off portions of their private business to the public, to make it bigger and better and more profitable than ever before.
But this is a process, and if you’ve never considered opening up your business to the public before, it can be hard to know where to start with it. So, the points below are here to help; be sure to keep them in mind when you’re ready to take your company to the next step.
Work with an Investment Bank
The first thing to do is find an intermediary – someone like Andrew Perry of UBS works as a good example here, because you’ll most likely be using an investment bank to put an IPO into action.
Make sure you find the right bank for your needs. Look into their reputation, and how long they’ve been an investment bank, and always take a look at their other success stories. Do you like what you’re seeing and hearing? And before you go ahead, make sure you approve of their distribution model as well.
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Come to an Agreement
Once you’ve picked a bank, you need to come to an agreement with them. Known as ‘underwriting’, you can find a breakdown on the main types of this right here. But what you need to know is the process of ‘due diligence’ – come to an underwriting agreement, draft a letter of engagement and a letter of intent, and then comes the registration.
The bank you work with will go through all of these steps with you, but these documents ensure you follow the law, come to a pricing point for all involved parties, and have something to work with when it comes to marketing your future company shares.
Pick a Price
Of course, you’re going to have to pick a price at which your company is going to offer shares, which comes much later in the process than you might first think. Depending on how well your marketing has gone, and what kind of market you’re a part of, the price point is often undervalued to attract as many investors as possible. And the more investors you have, the more successful your IPO will be considered.
When Do You Go to the Market?
After the above steps, and also after a period of stabilization, your IPO will be market knowledge, and be added to the investment index. People will be able to rely on common tracking steps to keep an eye on how their investment is doing, and usually after about 25 days, the general value of your company shares will become public knowledge.
The process of attracting investors can seem like a difficult subject. However, the steps to follow can be quite simple, as long as you’re working with people you know and trust.